South Sudan Threatens to Quit OPEC+ Alliance Over Output Dispute
By Adedapo Adesanya
South Sudan has threatened to quit the alliance known as the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) if the group stands in the way of its ambitious plan to increase crude output to 230,000 barrels per day by 2024.
This was made known by the country’s first vice-president, Mr Riek Machar, in Juba on Tuesday, saying that South Sudan has had difficulties with OPEC+ over its crude oil targets.
“Our minister of petroleum has had issues with OPEC over the increment of crude production but we shall instead quit the organisation if we are hindered from increasing oil production,” Mr Machar said.
“Our target is to increase crude production right now and become an oil hub in the East African region and foster economic development for our people,” Mr Machar added.
The country has ambitious plans to increase crude oil production to 230,000 barrels per day by 2024. However, the country’s August production cap, agreed to by OPEC+, was significantly below that, at 130,000 barrels per day.
Although one of the smaller producers in the coalition with an output of 160,000 barrels per day in August, according to Argus estimates, it has regularly exceeded its agreed OPEC+ quotas.
In an internal report, an OPEC+ technical committee found that South Sudan accounts for around half of the coalition’s overproduction to date. The group has asked members to compensate for past overproduction with additional cuts before the current agreement expires at the end of the year, but the report shows South Sudan had yet to submit compensation plans as of late August.
As per reports, South Sudan’s oil minister Mr Puot Kang Chol said that current production is only 107,000 barrels per day as a result of “several challenges such as floods and depleted oil wells.”
Efforts are being carried out including an environmental audit of all wells to map out ways to increase production without endangering the environment in line with international standards, Mr Chol said.
“With the global happenings in the world, especially the Russia-Ukraine war, it warrants us to produce more oil,” he added.
Changes within the OPEC+ alliance don’t happen all time. Qatar was the last country to formally exit the group, effective as of January 2019. Mexico, which remains part of the group’s output agreement, has not been allocated a quota since July 2020. South Sudan said back in October 2020 that it wanted to renegotiate its production quota because the output from some blocks had resumed since it first entered the deal.
South Sudan was among the 10 countries that teamed up with OPEC+ to form the wider OPEC+ group in 2017. Others include Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, and Sudan.